The Indian authorities might have added an extension to the current law in the country, regarding digital assets.
According to sources, the Indian Government could enforce a 2% levy on any crypto assets that are purchased from off-shore exchanges. The 2% levy will be added to the settlement price that has been set for digital assets purchased from exchanges based overseas.
How can this impact the crypto market in India and what limitations follow, are all essential details that will be disclosed to the crypto enthusiasts. However, in recent news, plans by the Indian Government to regulate crypto assets instead of banning them were reported, which can indicate the importance of digital assets.
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How Easy Is It for India to Impose the Levy?
The equalization levy was first applied by India in 2016 and was updated last year. According to the updated legislation, a 2% tax applies to crypto exchanges that are based in foreign countries but are offering services to investors and traders in India.
The founder of Transaction Square, Girish Vanvari stated:
“The levy is on the selling price and companies may be required to add this to the cost of the crypto assets.”
Some people have also been known to oppose the decision and even argued regarding the implementation of the tax.
One of the tax partners of AKM Global (tax consulting firm), Amit Maheshwari is of the opinion that imposing such a tax is likely to prove difficult for the Indian Government. According to Maheshwari, the Government needs to establish detailed guidelines on crypto regulations before the tax is imposed.
“In the absence of any guidelines on the treatment of crypto assets, there is ambiguity in how these would be treated under the tax laws and FEMA (Foreign Exchange Management Act).”
The regulation of crypto assets in the country is still undecided due to the contradicting opinions of the Reserve Bank of India and some officials. Considering the obscure outcome of the crypto ban bill, it can be difficult to say if imposing a tax on foreign-based crypto exchanges will be as successful as the Government hopes or not.
Crypto Assets are Significant
Crypto enthusiasts and officials in India that support cryptocurrencies are of the view that digital assets should not be banned. Instead, they should be classified as a completely different asset class. This can be beneficial for investors and traders in India, provided the Government comes to a decision regarding banning or regulating the cryptocurrencies.
Meanwhile, the implementation of a tax on exchanges offering services in India also seems somewhat unlikely.
This can indicate that crypto assets are significant and their utility and prominence cannot be so easily disregarded, especially when they are being adopted and regulated in most parts of the world.
Therefore, if you are a crypto enthusiast and have been planning to become an investor then you need to do two things. First, you should analyze your suitability for investing in crypto and second, you should use the safest crypto exchanges to purchase digital assets.
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